Barclays FX Month-End Analysis

The passive rebalancing of FX hedges at month-end is expected to lead to moderate amounts of USD selling. Equities in US and Europe outperformed most of their developed peers, as better economic data, fewer concerns about Greece in the short term, and a relatively benign earnings season pushed stock markets up. On the other hand, bond markets remained supported by very loose monetary conditions around the world. Our model, which works under the assumption that static FX hedge ratios are maintained, estimates that moderate amounts of USD will be sold, particularly versus EUR and GBP.